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IINO san
This time, we will explain about how to read an insurance policy.
Why do we need to read it?
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IINO san
By reading this, you can understand what risks are covered and how they are covered.
There’s a lot to remember, isn’t there?
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IINO san
Yuo, but having a good understanding of insurance is crucial as it helps mitigate risks effectively.

What You Can Gain from This Topic

  • Review of Marine Insurance
  • How to Read an Insurance Policy

Review of Marine Insurance

Marine cargo insurance covers damage to cargo during international transportation due to unexpected circumstances.

Not only does it cover the damage to the cargo, but it also covers the profit the importer would have earned from the subsequent sale.

I remember it, that is 10% of the CIF amount.

The exporter or the importer is responsible for insuring the shipment, determined by the agreed Incoterms.

Insurance Policy

Once you purchase insurance, the insurance company will issue an insurance policy.

It’s important to check all shipping documents match the information in the insurance policy, such as:

  • Invoice
  • Packing list
  • Bill of lading
If there is a discrepancy, the insurance may be denied in case of an emergency. 
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To avoid future troubles, it is important to comprehend the insurance policy’s contents and keep note of the points to confirm.

How to Read an Insurance Policy

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IINO san
Let’s review the details of each item in a sample insurance policy.

1) Insured

The insured is a party who receives insurance benefits in the event of cargo damage.

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Generally, the importer is insured.

If the term is like CIF and the exporter is the policyholder, they can claim the insurance benefits. However, it is typical for the policyholder (exporter) to assign the right to claim insurance to the importer.

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IINO san
That’s because the importer may require insurance coverage depending on Incoterms.

2) Invoice number

The invoice number, the control number, which each company can determine at its discretion, is specified.

3) Insurance policy number

The insurance policy number that the insurance company assigns.

4) Insured Value

The insured value is typically set at 110% of the CIF value.

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If the CIF price is $60,000, then the insured amount is $66,000.
The currency unit of the insured amount is the same as the one specified in the shipping documents.

5) Insurance payout location

This is the location where the insurance proceeds will be paid.

What’s the insurance proceeds?
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IINO san
Insurance proceeds is to the amount of money that an insurance policy pays out to the policyholder or the beneficiaries.

6) Accident notifying party

It refers to the contact point in case of an accident.

  • The insurance company
  • The claims handling agent

Details above are specified, and it is stated that “the insurance proceeds will be paid through this designated notification contact.”

7) Insurance terms

Either of the following insurance terms are specified:

  • ICC (A)
  • ICC (B)
  • ICC (C)

It outlines the extent of risk coverage provided by the insurance.

We have learned it in the previous topic!

8) Transportation mode/method

If the transportation involves the journey from the shipping point to the loading port, and insurance is required for this interim transport, the mode of transportation is specified, such as:

  • Truck
  • Rail

9) Interior port or place of loading

The dispatch area is specified if the dispatching place differs from the loading port, and insurance is required for transportation between sites.

10) Ship or Vessel name

The planned vessel name for loading is specified.

11) Port of loading

The planned port for loading, where the shipment is intended to be loaded onto the vessel, is specified.

12) Date of departure

The scheduled departure date of the vessel intended for loading is specified.

13) Unloading Port

The port where the insured cargo is intended to be unloaded is specified.

14) Final destination and transportation mode/method

If the unloading port differs from the final destination, the final destination and the mode of transportation to that point are indicated.

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IINO san
This is similar to (8); it can be a truck or rail and something like that.

15) Product names, quantity, etc

The following items are specified:

  • Product name
  • Quantity
  • Packing
  • Shipping marks, Numbers

“In container under &/or on deck,” as stated in the sample, indicates that cargo loaded on the deck is treated the same as cargo loaded inside the vessel.

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Loading shipments on the deck increases the risk of damage! In that case, it’s better to arrange a special contract.

16) Place of issue, issuing date, the number of printed copies

The place of issuance, publishing date, and the number of printed copies are specified.

17) Italicized clauses

Italicized clauses state that losses caused by war, strikes, riots, and disturbances are not covered, and the insurance company exempts these clauses.

18) Margin clause

The following clauses are specified:

  • Grounding Clause
  • Stranding Clause
  • Other Insurance Clause
  • Loss Notification Clause
Wao, that’s a lot!

19) Body of the policy

The policy document has remained unchanged for over 200 years, so the content is unsuitable for modern transactions.

Therefore, the following clauses are appended to address specific circumstances or risks.

  • Margin clauses (such as Italicized clauses)
  • Institute Cargo Clauses
  • Institute War Clauses (Cargo)
  • Institute Strikes, Riots, and Civil Commotions Clauses
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If you encounter any issues, it’s better to ask the insurance company.


The points mentioned above are vital aspects to check and keep in mind when entering into a contract. Please use them as a reference when obtaining insurance coverage.

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This is the last article about marine cargo insurance!
I’ve learned a lot.
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Many aspects can vary case by case. You have to check the details with an insurance company!

Enhanced Learning with Videos

Test Yourself

Reinforce your understanding of this topic by working through the exercises. Attempting the exercises without referring to the material as much as possible is advisable.

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The act of “remembering” helps it stick in your memory.